Abstract
When firms collude and charge supra-competitive prices, consumers can bring antitrust lawsuits against the firms. When the litigation cost is low, firms accept the cost as just another cost of doing business, whereas when the cost is high, the firms lower the price to deter litigation. Class action is modeled as a mechanism that allows plaintiffs and attorneys to obtain economies of scale. We show that class actions, and the firms' incentive to block them, may or may not be socially desirable. Agency problems, settlement, fee-shifting, treble damages, public enforcement, and sustaining collusion through repeat play are also considered.
Disciplines
Antitrust and Trade Regulation | Commercial Law | Contracts | Law and Economics | Litigation
Date of this Version
9-1-2020
Working Paper Citation
Choi, Albert H. and Sprier, Kathryn E., "Class Actions and Private Antitrust Litigation" (2020). Law & Economics Working Papers. 180.
https://repository.law.umich.edu/law_econ_current/180
Included in
Antitrust and Trade Regulation Commons, Commercial Law Commons, Contracts Commons, Law and Economics Commons, Litigation Commons
Comments
This paper is available in its final published form at Choi, Albert H., and Kathryn E. Spier. 2022. "Class Actions and Private Antitrust Litigation." American Economic Journal: Microeconomics, 14 (3): 131-63. DOI: https://doi.org/10.1257/mic.20200059